Minimum Wage Isn't A Living Wage

Minimum Wage Isn't A Living Wage

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Reasons for Minimum Wage Worker’s Tough Lives

In 1938, federal minimum wage legislation became effective for the first time
when the Fair Labor Standards Act passed (Sidey 573). After sixty-seven years, today,
the minimum wage, which was originally set to make sure that working people could
support themselves and their family, increased twenty times (Sidey 573). Nevertheless, the low-wage workers have never gotten rid of the hardship in their lives. Two main reasons cause the current situation. The increasing renting prices and the increasing rate of health care, which exceeds low-wage workers’ real income by quite a lot, make their lives tough all the time.

Minimum wage, the smallest amount of money per hour that an employer may
legally pay a worker, became a part of state law in Massachusetts in 1912 (Sidey 573).
After 14 other states, the District of Columbia, and Puerto Rico set similar laws in
America, the first federal minimum wage legislation became valid. The Fair Labor
Standards Act of 1938 “firmly established the federal government as a regulator of
wages in the United States by establishing a minimum hourly wage for all employees
engaged in interstate commerce or in the production of goods for interstate
commerce” (Huckshorn 167). Based on 2004’s Current Population Survey of America,
today two million workers earn at or below minimum wage out of 73.9 million
American workers who are paid at hourly rates (Characteristics). In 1996, the
minimum wage raised to $5.15 per hour. Some people argue that this federal
legislation helped low-wage workers a lot. Nevertheless, low-wage people are still
suffering from hardship because of the big gap between their incomes and
expenditures. In 1998, the minimum-wage was “$2,500 below the poverty line for a
three-person family” if a worker works 40 hours a week without vacations (Rothman).
The minimum wage should be $6.24 to maintain the same average purchasing power
in 1998 as “it averaged in the 1970s” (Rothman). Up until 2005, in California, nearly
16 percent of Californian low-paid workers live below the poverty line according to a
study of State Industrial Welfare Commission of California (Garcoa). These figures
and examples denied the argument that this federal legislation helped low-wage
workers’ lives. Two main reasons cause the big gap between minimum-workers’ real
income and basic living requirements, the persistent increasing of the rental price and health premiums.

The first reason for hardship concerns the high rental prices in America

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nationwide. The high rental prices cause low-paid workers difficulty in finding a place to live. After 1997, the rental price has increased many times while the minimum wage has stayed at $5.15 for eight years (Sidey 573). In 2001, the National
Low-Income Housing Coalition (NLIHC) in Washington, D.C. released a
wage-and-rent analysis, the “Rental Housing for America’s Poor Families” (Derus).
Based on the report, due to the five percent increase in rental housing costs in 2001, a minimum-wage worker, “even employed full time”, cannot afford a “ ‘fair market rent’ for a two-bedroom apartment ‘in any jurisdiction’ in America” (Husock). Federal fair market rent, which assumes rents consume 30 percent of worker’s income, seems
“unfair” in today’s economic environment. According to the report, a full-time
American workers needs a $14.66 hourly wage to “afford a modest two-bedroom
apartment in the nation’s average rental market”, which exceeds the current minimum
wage by nearly 10 dollars per hour (Derus). For example, in Columbus Ohio, a
low-paid worker who earns $5.15 hourly wage could afford monthly rent of no more
than $268. However, the fair market rent in Columbus, which “established annually
by the U.S. Department of Housing and Urban development”, is $626 for a
two-bedroom unit (Bailey). Due to the shortage of the workers’ income, young people
are forced to continue to live with their parents. Families are forced to live with their
relatives. Most people need to pay an “unbearably high percentages of their income to
afford housing” based on the analysis of National Low-Income Housing Coalition
(Deurs).

Moreover, the gap between the income and expenditure never shrunk during the
following years. According to a report by the Community Service Society (CSS), the
increasing rates of the rent renewals in New York in 2003, 2004 and 2005 are 7.5
percent, 6.5 percent and 3.5 percent (Zononi). Because of this series of increases, “74
percent of poor households in regulated apartments and 77 percent in income
unregulated apartments paying more than 50 percent of their wages toward rent”
(Zanoni). The huge gap can be also observed by comparing the gross changes of the
workers’ income and the rental prices from 1993 to 2002 based on the report “Making
the Rent: Housing Hardship and Rent Burdens”, written by Victor Bach, “A Community Service Society Senior Housing Analyst (Zanoni). During these ten years,
the rental price for low income renters rose by 67 percent but at the same time the
income rose by only 57 percent, creating a 10 percent chasm between these two
figures (Zanoni). Taking into account all the figures and demonstrations stated above,
one can easily conclude the first main reason of the hardship in low-wage workers’
lives is highly rising rental prices.

In addition to the increasing of rental prices which leads the low-paid workers’
difficulty finding a place to live, the rising of the health premiums makes this group of
people fear diseases and sickness.

The continual increasing of health premiums during the past several years
became the other threat to low-wage workers’ lives. On the one hand, the low-wage
workers cannot afford the high rate of heath premiums. According to a survey
released on September 9, 2004 by the Kaiser Family Foundation Health Research and
Educational Trust, the 2004’s health premium shows another 11.2 percent increase
after the 13.9 percent increase in 2003 (Gaynor). Although the increasing percentage
seems to be getting smaller, the change in health premium still exceeds the average
increase in wage rates (Gaynor). In 2004, “the cost of family health insurance is
rapidly approaching the gross earnings of a full-time minimum wage worker,” said
Kaiser Foundation President Drew Altman (Gaynor). Until 2005, the average annual
premiums for family coverage reached $10,880, which has already exceeded a
minimum wage worker’s annual gross earnings of $10,712 (Snowbeck). The situation
becomes more severe because of another rise of 9.2 percent in health premium in
2005, the first time in the past five years that the growth rate has been in the single
digit (National). This shortage of the salary means a mom cannot stay home with kids
if a dad works as a minimum wage worker. Moms need to work also; otherwise they
have no extra money to buy the health premium for her children (National).

On the other hand, most low-wage jobs do not provide health insurance. At the
same time of the health premium rises, “the percentage of firms offering health
insurance to workers in 2005 stood at 60 percent,” which decreased from 69 percent
in 2000 (Snowbeck). The U.S. Census Bureau reported that the total number of
Americans without any health insurance rose to 45 million in September 2004
(Gaynor). Most minimum-wage workers are in this group. A mom in minimum-wage
worker’s family in New Jersey, Flor Segunda, said that the doctors require immediate
payment before they would see her sick children, but many times she didn’t have the
money. Her daughter has a temperature and she tried to take care of it by herself
because she could not afford to take her to the hospital (Shulman 50). This situation
must happen in many low-wage families. Low-paid parents even do not “want their
children to play outside” because their children may get sick and they cannot afford
the doctors’ expenses (Shulman 50). Even if some minimum-wage worker is lucky
enough to have insurance, he needs to pay over twice as much in annual premiums for
family coverage (National).The families without health insurance rely on the
emergency rooms for their primary care. However, the emergency-room care is also
very expensive, which the low-paid family cannot afford (Shulman 51). No health
insurance exposes these families to sick and danger. The high health premium and
insurance become the other significant reason for the hardship of minimum-wage
workers’ lives.



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